Just wanted to share my story here. I bought property in Central Florida in 2003. It's a full-documentation note, 30-year fixed, although it does have PMI. I didn't care about prices rising or falling, because I fully intended to live at that address until the note was paid off. I liked Central Florida.

Anyway, in 2008, I had a life-changing burnout event at work, and moved to an island. But I always believed that people should honor their obligations, so I kept paying for the place, eventually getting several new fixtures installed and minor renovations done. It became a rental property (because, as you may have guessed, by 2008 it was already upside-down enough that selling wasn't an option). I hired a property manager, who eventually got me a tenant, who paid on time. Even though I was still losing a couple hundred per month, I'm honoring my obligations and not being a deadbeat, right?

Around the second half of last year, the property manager started sending checks later and later and never answered his phone. Finally I got him to send my money, but I couldn't help but notice it came up about $80 short. I know I could have complained to FREC about him, but instead I opted to lawyer up and fire him. After paying a lawyer several hundred dollars to do nothing more than send a couple polite emails, the property manager eventually let me out of his management contract and transferred the tenant's security deposit (minus his $250 'cancellation fee', natch). I was now free to manage my own property directly, which would surely be a bit more hassle, but at least I didn't have to worry about a slacker property manager, right? And I'm still honoring those obligations and not being a deadbeat, of course.

In January, my first month of managing my new property directly, the tenant contacted me to inform me that he'd "never been sent" a lease renewal and was therefore a month-to-month tenant. Furthermore, he was moving out in 15 days. Wow, I figured this was some coincidence, so after more heated correspondance with the ex-property-manager (actually the lawyer had to do this, they didn't respond to me), I discovered that the property manager had in fact sent the renewal documents to the tenant on multiple occasions. The tenant had merely never signed or returned them, always having an excuse ("out of town", "on vacation", and so forth). By now, I had to face the truth: The tenant had engineered this opportunity to escape on short notice. But why?

After the first of February, I missed work to take a very long trip back to Central Florida to check on the state of the property after the tenant had vacated, and I understood. Insects, dirt-smeared walls, broken fixtures, feces on baseboards, and a pervasive odor of cat urine. If I had crapped this place up, I wouldn't want to stay here either. I sighed, and threw away as much trash as I could, as I pondered how much it would cost to renovate this pigsty that had once been my "forever" home. I hired an old friend to manage photo-documentation of the mess and coordination of cleanup, and went back home to draft the Notice Of Intent To Claim Against Deposit.

The ex-tenant received my Notice Of Claim, and 'ballistic' does not even describe it. He apparently thought the place was clean enough to rent out to another tenant, and was counting on the return of his security deposit in full. You may have guessed, I kept the whole thing, even though it was only about 33% of the cost necessary to clean it up at least enough to not look (and smell) like an abandoned sewage treatment facility. I understand he is still baying for my blood on Facebook to this day, even though the 15-day period to challenge my Notice Of Intent has come and gone (which is a relief, because as I understand it, he thus forfeits his opportunity to follow up on his heated threats to sue me to recover his deposit. It would have been fun to embarrass him in court, but I really just wanted to stay at home, for reasons I'm about to make clear).

So now I'm renovating a vacant place several hundred miles away, as my salary has been cut to approximately half of what it used to be. And even though I'm still in my early 30s and have had zero health problems before (in fact, I eat whole foods and bicycle 12 miles a day), I've required a lot of emergency medical attention and will have surgery soon to remove a malfunctioning internal organ. I couldn't pay for this place any longer even if I wanted to, because my surgery and my family require my most immediate attention. I am therefore 45 days into the 90-day period before Lis Pendens, and I am honestly looking forward to the day that the bank deed-in-lieus, or forecloses, or whatever they're going to do.

But I'm sure someone's still out there grumbling, "pay your bills, deadbeat," even as medical costs decimate my savings. The bank and/or Freddie may even consider my default to be 'strategic', since that place is not my primary residence (it's an "investment" property, didn't you know? That's why it was never eligible for HARP/HAMP). If I had it all to do over again, I would have defaulted years ago.

The banks print money from thin air and want you to kill yourself paying the interest on it forever. eff that.

If it was me, I would advertise for a new tenant a few hundy below market rate and get a flood of applicants - take the best one who wont hassle you (tell them verbally the deal is lower rent and no hassles!). Then I would not make payments and keep the rent to use for myself. It takes 3+ years to foreclose in FL, not sure if its a recourse state or not......

If it makes you feel any better, you not paying the mortgage is just part of the business contract you negotiated with the lender. There is no moral obligations involved, as morals have absolutely nothing to do with it. People who think otherwise live in an ideological world that does not exist.

Had you borrowed money from friends or family, that would be an entirely different story. You'd most certainly have an obligation to pay them back.

I don't think you were required to live up to your part of the bargain, just as I don't think all of the others that walked away early on, were required to. The government hansn't lived up to their part of the bargain. I don't think any home owner should have been able to recive any assitance either. The government should have left the housing market up to its own means, and let prices dictate value. It very well may have been the case, had the Government not stepped in 2007, the market would have well been at the bottom by 2010. We might have even seen some honest growth, had the government not squandered trillions in dollars, that could have been used to foster the real growth they robbed from every happening in the first place.

I would like to think you hung in there as long as you did, gambling that day may come. By this point, it is evident our government will never let the market or the economy for that matter rebound.

You don't owe anyone anything Take your lumps and chin up. You may have a 795 credit score with in 7 to 8 years from now. Time heals all wounds, this too shall pass. You couldn't have worse credit than mine in 2002 every account I had went upside down. I didn't have a foreclosure. But I had repossession, and a couple judgement liens. I bought a house in 2010, my credit was 680 then, I bought a new car in November of last year and my credit was 790 by then.

Don't beat your self up over the stupid shit, love your wife and kids a little more and forget about it. And most of all focus on getting your health in order. You don't need that house, let the mother epher burn.

Did you put down a down payment? Again and again we find that people who put a down payment down 'get screwed'.

The zero down crowd was genius as they screwed the banks good. The prudent, the savers, the responsible are getting shafted by our current system. I'm not sure how this country can function by screwing these people who 'are suppossed to be the backbone' of the country? its a mess for sure.

I wouldn't call you a deadbeat, and I don't think any reasonable person would, either. Impulsive and innumerate for buying in Orlando Fl in 2004 -- perhaps; but not a deadbeat for capitulating and walking away from a poor financial decision. I might've hated you in a generic sense for being a brick in the wall, but hey...To my mind, a deadbeat would be the skeezass who hasn't paid on his mortgage in X # of years and yet benefits from the utility of his residence either by renting it out or living there himself rent free. That is fucked on more levels than just basic fairness.

BTW I lived briefly in Central Florida during that same period (College Park area) and I have never witnessed a more palpable example of crowd mania before or since. I actually feel lucky to have witnessed it up-front like that, as it was a very illuminating glimpse into human behavior/consumer psychology. Some of the most rational, reasonably numerate friends I had at the time seemed to possess their own squaring jigs for why it made sense to buy a house. I remember trying to rationalize with some of them about why real estate always going up just didn't square with reality. I always felt like the guy trying to talk a kid out of tattooing his first girlfriend's name on his shoulder. The forces were so great that, yes, I occasionally doubted my own common sense; I thought maybe I was old fashioned or stubborn or (shudder) 'maladaptive.' One thing I don't see mentioned much these days is the impact that the turn of the century had on popular perception. I remember there was this vague sense that -- 'Hey, it's America in the 21st century! It's a totally different game now! '

Anyway -- your loss is no great one in my opinion. Central Florida (Orlando) could have been nice enough once upon a time. Unfortunately, it is nothing more than an asphalt patty melted over some moldy swamp snot rotting in the sun. Some of the rudest and/or scariest people collect their mail there. Indeed, most of Florida is a total write-off, save maybe the Dry Tortugas. It's a shame.

Justanother. Don't be suprised that I look at you as a "victim". Not of robosigning or anything silly like that. I look at you as a "victim" of usury. Something no one has the balls to this day to say. Especially that shitpad of a government that fails to protect its people. Yet claims war is the best way to do it and lets their people fall victim to any kind of usury they want to bring about leaving their people in "debt slavery". They wonder why people are in the streets calling for their heads. The people once again calling for their head have been screwed by some really clever crooks. They may not know just how because of the distortions. However they do know they have been swindeled.

This government operates in very much illegal fashion in many ways. One of them is "taxes". Which they harp on endlessly on television. Which they have "no right" to whatsoever. That they can never "collect" if you decide not to pay. That they never could get around. Except to move the "collection point" to some far off island and put it in a trust. Which still does not work. Property taxes. Some won't dare go near that one same deal. Sue in court you wind up in the Supreme court. Which only issues opinion that everyone honors for the most part. They will never call it "law" maybe on television that dosen't mean shit of course. Don't pay your taxes get a nasty letter is all it amounts to. Sherriffs sale for back taxes on a house. TAKE NOTE THEY ARE ALL VACANT THE ONES SOLD AT A SHERRIFFS SALE FOR BACK TAXES. Or some fast talking swindler buys the note and trys to get something out of you. Ask yourself why do they sell the tax note and not just seize the property. Because they can't. So you aren't getting your 1.5 million out of me. You can't even fucking add because I would owe way more than that if your taxation had any validity at all. You want your 1.5 million? I've got your 1.5 million right between my legs.

I really look forward to some dweeb now getting on here to talk about "taxes". Know what I don't give a fuck for your drones or you.

I know there are some well government types that watch all of this. They monitor of course. Don't ever think this place is "free". So for them I haven't paid taxes in well 18 years. So fuck off. They even stopped sending me letters. I have repeated this several times in this forum. In fact they can "fuck off" in general. Why because they are nothing but a bunch of crooks. Fast talking the public. Selling me Nationlism and Democracy. I don't believe in their bullshit anymore than I believe Jesus treaded water.

Property investment isn't all its cracked up to be there are a hunderd thousand things you need to know. Little shit details that can make your day go really fucking bad. Don't believe me ask anyone in here thats in it.

There are better ways to live life. Deal is they will never teach you them in school. Much less bring up taxes as a subject in school. (funny ain't it). Well there is the "tea party" I guess. That they can get away with. You will never be taught to be self sufficent in school. You will only be prepared to work for others. You gave independece a good shot kid. Deal is it ain't over. There are things that are far and better than property investment. That have way, way, way, less work involved. Simple enough. They just don't want you to know about them because you will run not walk away from the debt and the bonded servitude they want you in. Those two things don't ignore. They aren't from any God. Those two things are very much earthly.

The zero down crowd was genius as they screwed the banks good. The prudent, the savers, the responsible are getting shafted by our current system. I'm not sure how this country can function by screwing these people who 'are suppossed to be the backbone' of the country? its a mess for sure.

You have it all wrong. The banks wanted anyone who fogged a mirror to get a loan. That was the plan. The banks made a gazillion off the loans, the servicing of the loans, the securitization of the loans. Then they made money being bailed out and by collecting their property back.

The only way to make them think twice about blowing another housing bubble is to walk away. Prices went up by the sheer availability of easy money lending that drove the prices to unsustainable levels.

Then the hot money that came in to make a profit from the Square Mile left and the thing crashed.

The housing bubble was a preplanned scam hatched at Basel 2 in 1998 when bogus risk management was adopted and when off balance sheet accounting of bad loans was adopted.

The housing bubble was a preplanned scam hatched at Basel 2 in 1998 when bogus risk management was adopted and when off balance sheet accounting of bad loans was adopted.

Respectfully bgamall. I have to disagree with that. Another misnomer was that it was "subprime loans" the frost is obviously off the pumpkin on that one. In that the lie did not work (subprime) all prime loans (good rates) are caving in also. So thats obvious. I completely understand you are genuine in your thinking. As all of us have the temptation to "look deeper" into a financial culture of swindel that has endless schemes.

You can start right at Fannie Mae "securitized" loans and stop there. Freddie Mac has had little if any "bearing" on the market. Savings and loan and banks could not handle the bad frieght of loans. Here I will give you an example. What you don't know or may not know if your not aquianted with foreclouser. Which many did not pay attention to heretofore. There were on average 4500 to 5000 forelousers on average A MONTH (low side really) in LA county. When the economy was really, really good. Or in a good steady economy. That is a very steady number. What is really failed at being looked at that is in EVERY county around a major city. So dopey fucking China FAILS again. Honest to God they need to stick to growing rice anything economic they might as well stick their heads up a cows ass to get a look at steak. The MBS scheme is a fucking failure. Someone needs to tell them that. I just did. More than likely. They will get conned or forget that fact again. BANKS WILL NOT TAKE THOSE KINDS OF LOSSES. S&L's failed in losses of that nature.

If you don't believe me on that foreclouser rate. You need to grab reports on that as quick as you can. Thing is they have closed down many of the "county sites" trying to hide the losses.

I totally disagree. Fannie and Freddie actually pulled out of the origination of loans and so did the CRA circa mid 2003. That is when the real bubble took effect. In fact, the real bubble was private MBS without Fannie and Freddie guarantees, that were rated AAA when they weren't.

So, it is clear that the government involvement did not start up again until the bogus CDO's had been spread around. Did Fannie and Freddie buy and sell these CDO's? It really doesn't matter, because theses loans were not guaranteed by the government until after the crash.

Artimus, check out the chart on this article I wrote. Take a look at the private MBS and when they took over. This chart totally discs Fox News who made the entire bubble a CRA/ACORN conspiracy. But the conspiracy was much higher than that, reaching all the way to the central banks. Notice Fed mortgage pools pulled back mid 2003 when private MBS took over

Ok so you are basically saying that Fannie and Freddie "sold" their paper to these outfits or they were in some way connected to "Fannie and Freddie"? What your doing is pointing to something like a LaSalle or something that does loans over the Fannie-Freddie limits it seems like. Those are really high risk loans.

Ok so you are basically saying that Fannie and Freddie "sold" their paper to these outfits or they were in some way connected to "Fannie and Freddie"?

I would say this private MBS paper ended up at GS, Morgan Stanley, Lehman, Bear, etc. Then as much of it as they could process went to bogus AAA rated CDO's spread to unsuspecting investors the world over.

I am not so concerned with Fannie and Freddie involvement at that time as this paper was not guaranteed by them until after the crash.

The government then forced Fannie and Freddie to guarantee this paper as I understand it. I have focused more on the beginnings of the bubble.

Boom. Well I guess I get that. Interesting article. BGAMALL. Never considered that. I guess I did from sight value on the Real Estate itself physically. Never did consider that kind of securitization. Know what not a whole lot written on that. From what I have seen and read. Thanks very interesting.

Wow...
I really feel for you! I was in the same boat... Honoring my responsibility to death!
Doing the right thing! Then I realize that getting rid of the property by all means is right thing to do! It was emotionally difficult experience( I was conflicted since I never even been late on any of my bills) but once I got rid of the property through foreclosure, I felt liberated, alive! I checked with local bankruptcy attorney and tax attorney prior to proceed with the foreclosure. Now I have relocated to a state with much lower living cost and happily renting! Please know that there is always light at the end of the tunnel. I feel that home ownership is overrated and my flux life works better with renting! You are free about to move!

Boom. Well I guess I get that. Interesting article. BGAMALL. Never considered that. I guess I did from sight value on the Real Estate itself physically. Never did consider that kind of securitization. Know what not a whole lot written on that. From what I have seen and read. Thanks very interesting.

YW, Artimus. Spread the word. The problem is, the Fox concept of focusing on the CRA and the GSE's actually hid the central banks and the private investment banks and the shadow originators from blame.

There is a method to that, IMO. Those Fox guys want deregulation. If they can show the CRA did it, they can point to over regulation. But in fact, if the meat of the bubble was private, with hot money from hedge funds funding shadow banks, then more regulation is needed to stop it from happening again.

I would say, keep an eye out on what happens to the Volcker Rule and Dodd-Frank. Those actually slow the bubble making machine. If they are watered down or repealed, look for some sort of real estate bubble to occur again, say before 2020.

You may be interested in this article, which shows that bubbles in housing were spun by the Big Bang, deregulation of the financial industry in London, in the Square Mile. Thatcherism actually sowed the seeds of the housing bubble. Wall Street uses the easy rules and know how of the British financial system to establish bubbles here.

I really wish that Patrick had considered emailing this out to everyone. In the UK they called them self certifying loans. They became liar loans here. :)

So sorry this happen to you . I also live in the Orlando area. But you brought a house things happen in life . If all worked out while you were renting the house out and if it worked out in 30 yrs the house be paided off and alll be well ? But it didn't so you walk away.? imho I don't know maybe it's me but I alway's had to go to the bank for a loan they never came to me .

YW, Artimus. Spread the word. The problem is, the Fox concept of focusing on the CRA and the GSE's actually hid the central banks and the private investment banks and the shadow originators from blame.

bgamall. Your writting is VERY sophisticated. I see in some ways what your trying to impart. However its going to take some time to read that carefully. With concentration.

I try to simplify what I write. Of course I am trying to speak to the everyday guy. You are probably read by "professionals". That have more of a working knowledge of the industry.

I believe in the "Asset" of course. Paper can do little if not very little in my opinon. If I deal in "paper". I feel I am going to "get screwed". As many that thought they "knew paper" before the mortgage blowout did. Legal tender is very slight of hand in my opinion. If you can't live in it. Eat it, milk it, ride it or screw it. Its not worth much to me.

If I put a value on these houses. Say a split level 3 bedroom. Taking 3 months to "throw up" using true cost of materials. You would be very suprised at the price and length of the mortgage. I would put it at. I "know" the building industry really well. People that take things on face value. Its good not to take things at face value or what your told. Because in ones life here, there is virtually "no trading" just fixed pricing. Thats really screwed because you will never look into the true cost or value of ANY asset including a candy bar. Because you are schooled in everything you see that everything is take it or leave it. No one has ANY trading experince in this country. Because its all fixed pricing. Notice that.

In fact they could care less if you take it or leave it. Go into any store. They could give a damn. The labor is there and thats the bottom line. The labor to finish the goods and make the asset. Truck the asset. Shelve the asset. Check that asset out. Bag it and take it to the car.

Meaning? The everyday guy is their labor force. Once again paper is plentiful to them. You may believe in the system thats your choice of course. Paper to me is a really bad measure. Of a hard asset you should consider "without" the measure of paper. Think about this if they did have trading even with cash. Where you could trade say oh paper for a steak and tell the guy hey I'm not paying for it. I want a better trade. A. You would figure out whats going on and what it takes to get that steak to you. NOTHING. B. They could not fix the measure of that paper to keep you around. Cause you could trade your little way out of the "trap". C. The amount of people being suckered and not knowing anything vs the hip, savvy traders. Would drop like a rock off a mountain. Once again "paper" cost them virtually nothing. Can make all they want Its the only legal means of trade. "Legal tender". Your government made it so and they don't even fucking print it or have any say so. Which makes for nothing but unbridled colussion with your government and the "debt merchants". Wonder why the fucking government cares about selling houses? or cars? or anything? Even some of those nitwits don't get the fact its about labor. End the Fed? How about scraping paper and legal tender?

So if I walk up to a builder and say hey guy I know what you built this for. Heres the deal. Know what hes going to think to himself? I've got a million fucking suckers out here. Then hes going to tell me to buzz off. Ignorance never helps me in getting a good deal. Why. Because everything is "fixed pricing". No one looks at it any other way.

The bottom, bottom line. They use paper to a measure of time at labor for them. True some people have more. But deal is most of the country lives in a 3 bedroom. Thats simple fact. Certain jobs pay certain "wages". Don't think they don't use that. A simple look at the grocery store. Which guys never go to and I highly recommend will give you a really good look at the bullshit they pull on the little woman and its really easy to read. Also really, really easy to see what they are up to. A guy like you BG could figure that place out in very few looksee's

Then it might really occur to you. That little guy that had the store down the road was in business for himself. Hes no longer around. The Bar. That independent Restaruant closed. Then you look up at J.C. Penny or Macys, Sears. Saying to yourself that should have been closed a long fucking time ago. They "flood" those places with cash. If something goes wrong hey no problem its paper. The mall is vacant all GD week long. Not on the weekends. You have to wonder is something wrong? Can you afford the rent or anything but the franchise fee in the right place using company supplied food like a McDonalds? It ain't good planning. Its very well contrived. Your now a super manager. You don't get anywhere without a loan. Thats the truth. Everything is measured to be way overpriced for what it is to get your labor being the purpose and to keep you at it. Someone needs to tell somebody like Lou Dobbs that fucking debt isn't wealth. Its less than poor. That your a whale on the end of a harpoon when you have a 30 year mortgage. I swear these people think they are really in it. When all they do is fucking owe.

After all your not like the guy in fucking Brazil that has livestock everywhere. Food growing wild everywhere. A lake he just came back from fishing sitting there waiting like hes on vacation for a sunset with a huge house he built for himself and owes nothing. Does not much and answers to no one. That goes on all over the GD world. They ain't never going to show you that. You get Jabba the hut, Columbian drug runners and terrorists. What you have here is as good as it gets. Thats all your ever going to know, see or hear, here.

"Someone" might own stock. Its not fixed to any asset. You may well figure out thats an easy conduit right there. If it is fixed to an asset I want a new car for my GM stock. Same swindel. Just a different way of doing it.

I agree, not to the borrower, anyway. However, it is wealth to the lender. That is the problem.

Yes, that's the problem in a nutshell.

Debt IS wealth to the lender. It's control over labor. It's making people do things for you. It's making them into your servants.

The debtor must serve the lender, and the police enforce this servitude at the point of a gun through perfectly legal threats such as evictions, repossessions, and in the case of the national debt, through threat of prison for those who refuse to pay taxes because much of their taxes go to pay interest on the completely involuntary national debt.

There's nothing new here really. Check the bible Proverbs 22:7: "The rich rule over the poor, and the borrower is servant to the lender."

See the book "Who Rules America". That's where I was enlightened about the one and only goal of the 0.1%: control over the labor of other people.

Debt for productive investment can be a good thing, but debt for consumption, especially mortgage debt, is all about making people into your servants.